Absentee house owner?

[CaptCurmudgeon]

DW and I have decided on the Roanoke (VA) valley area for our retirement, at least for the initial phase. We are 20 months away from pulling the trigger and have been looking at the already affordable real estate there dropping some in the nest few months. This may be a buying opportunity for us, but we currently live in central Mississippi, about 750 miles away. We have owned a second home before the same distance away, but had very close friends to keep an eye on it for us. Has anybody had any experience where you paid for somebody checking on the house, say once per week, and arranging for emergency repairs if they come up?

I recall hearing somewhere where you would pay a commission for arranging emergency service at a certain percentage of the invoice.

The "management fee" for the 20 months would factor into the buy-not buy decision.

Thanks!

 

[Patrick]

I used two different property managers for my rental properties. It worked out OK, but cost me 8% of the rent in one case and 10% in the other. They took care of everything and just sent me a check for my share every month. If you want to go this way, I suggest interviewing several managers before you pick one. Review all the documents they will use first, so that you know what they, you, and the tenants will be committed to. Some managers want a whole month's rent for a "leasing fee," some want a fixed amount like $100, and some won't charge anything. Also, make sure they have experience in property management and are currently managing several properties. Good luck.

 

[Craig]

Same experience as Patrick.

Two other factors that can mitigate the hassle ... a renter who is handy, and likes to fix things in exchange for a rent reduction to the extent of their expenses that month (rare find, but we have one) ... and, a home warranty policy. We've used the latter for years. I prefer self insuring, but my DW swears by the warranties.

Between a manager and a warranty, it is actually much less hassle than I thought. And, travel to inspect your property is deductible against the net rental income.

 

[Mr._johngalt]

Same experience as Patrick.

Two other factors that can mitigate the hassle ... a renter who is handy, and likes to fix things in exchange for a rent reduction to the extent of their expenses that month (rare find, but we have one) ... and, a home warranty policy. We've used the latter for years. I prefer self insuring, but my DW swears by the warranties.

Between a manager and a warranty, it is actually much less hassle than I thought. And, travel to inspect your property is deductible against the net rental income.

In my experience, the difference between nightmare and nirvana
is almost 100% dependent on the tenant.

JG

 

[Arif]

Also, ask the PM what criteria he uses to screen tenants. Some of these PMs just use a pulse and security deposit. They should use some formula like "the tenant should have a monthly income of 3 times the rent, check previous landlords, etc."

 

[Craig]

Great points about the tenant. Top of the list.

When we have a great tenant, we work with them to keep them. Not foolish, to the point of not collecting rent, but we treat them as neighbors ... a small gift for the holidays, work with them if there are issues, fix things right away, etc.

And, when we search for a tenant, it is just like hiring someone ... my DW and local leasing agent interview them, buy and review a credit report, call their references. Our interest is in discriminating on the basis of their abilities as renters ... not race, religion or anything else ... we just want honest, decent renters, and as noted above, it is the biggest factor.

 

[astromeria]

My daughter's last landlord in DC wouldn't accept the fact that DD had the equivalent of 6 years of rent in savings & investments and papers showing school loan income--so I had to cosign her lease and send one of my pay stubs. I was typically working 5 hours a week at that point, so I picked a week in early January when we had a work crunch so the landlord couldn't see how little I usually made. I also blacked out my SS number, which fortunately turned out to be OK with her for a cosigning Mom.

 

[CaptCurmudgeon]

Thanks everybody for the advice. Didn't think about the house warranty, I do not think they are that expensive and maybe I can get the seller to cough it up. I know we have paid it similarly in the past. Just like everything else I guess you have to check and double check who you deal with.

 

[macdaddy]

My daughter's last landlord in DC wouldn't accept the fact that DD had the equivalent of 6 years of rent in savings & investments and papers showing school loan income--so I had to cosign her lease and send one of my pay stubs. I was typically working 5 hours a week at that point, so I picked a week in early January when we had a work crunch so the landlord couldn't see how little I usually made. I also blacked out my SS number, which fortunately turned out to be OK with her for a cosigning Mom.

Here in Boston landlords are very hesitant to rent to any students, regardless of how much money they have in the bank, or how much they make. Students/young people in general can more easily "disappear" and can be much harder to track down. I could see someone in their early 20s taking all that money out of the bank and going around the world for a few years. Cosigners provide extra security not only for the rent, but for any liability and damages incurred by the tenant too...

 

[astromeria]

Here in Boston landlords are very hesitant to rent to any students

Quite so, quite so. But my daughter was a 28-yr-old college grad at the time, had worked for sevearl years, and was in her second year of grad school at Johns Hopkins. She did "disappear" for a semester to work for USAID in Ghana, but it was after she got back that she found this apartment. She loved that apartment (me too!)--and DC, and school, and her job after graduating--so much that she didn't give it up even after she got married and her DH lived in Philadelphia!